subject: Can It Work? Examining the MLM Business Model [print this page] Can It Work? Examining the MLM Business Model
Amway is the company that has done more than any other to make the MLM business model famous. Or infamousit depends on your point of view.
There are almost as many jokes about Amway and the company itself as there are comedians! And everyone has heard at least 1 joke about the distant friend or relative who approaches everyone and their dog about a multi-level marketing business opportunity.
But even with all this humor, not many people know the truth about the MLM business model. So what are MLMs, and how do they really work?
MLMs are built around relationships. In good MLMs, representatives can make money through both direct sales commissions and by recruiting new representatives into their "downline." The MLM company generally pays a representative commissions on the sales that everyone in his or her downline makes.
You can see the incentive here. When you can generate income from someone else's work as well as your own, you have good reason to train and support the people you recruit. And you've got even more reason to keep recruiting new people.
There are a lot of benefits to this business model in addition to earning an income. MLM representatives develop social and leadership skills, they make friends, and in most MLM businesses, their accomplishments get regular recognition.
But can you actually make a decent income with an MLM business? The answer is yesmany people do earn enough to quit their day jobs, and some become rich. And with the Internet, more people are making more money with this business model than ever before.
The Internet has eliminated many of the things about MLM businesses that made them the butt of so many jokes. By using the Internet, MLM representatives don't have to solicit everyone from family and friends to total strangersinterested prospects come to them. MLM representatives don't have to go to all of those sales meetings anymore because training is done online.
In addition, the Internet has opened up the MLM market way beyond the traditional boundaries that were created by the limits of any one representative's time and resources. MLM representatives don't have to be content with recruiting a handful of downline reps anymorenow they can recruit and manage dozens at a time.
But even with the Internet, the vast majority of people who become MLM representatives fail at their businesses. Why? There are a lot of reasons:
The person isn't ready for the commitment involved in owning his or her own business
The MLM business has already saturated its market
Few people have the charisma needed to recruit and manage a downline
The MLM product isn't popular enough
Some MLM businesses have such complicated compensation plans and requirements that people give up in frustration
So yes, some people do very, very well with the MLM business model, particularly now that they have the Internet to work with. But running an MLM business is tough. You have to have the charm and drive that attract others to work with you. Then you have to train them, manage them, and keep them motivated to continue going on their own and recruit others.
Oh, and you need to keep your own retail sales up, too. That frequently means that even as you're online managing your downline, you're also dealing with people offline to make sales.
The MLM business model is ideal for certain kinds of people. Unless you're one of those people, though, you may not do so well if you decide to join an MLM.
